What do traders think about crypto regulation? While it may be impossible to know the exact opinion of every trader, there are several common themes that seem to emerge from these discussions. Some believe that increased regulation of crypto assets will stifle innovation and reduce trading volumes in the industry. Others argue that new regulation will protect long-term investors and prevent fraudulent activity in the crypto ecosystem. Regardless of the views, tighter regulation could also help the industry grow by establishing trust and providing clear guidance to companies looking to invest in the emerging crypto economy.
Regulators need to understand that crypto is a product and a tech infrastructure, just like other products and platforms. In other words, crypto is a product and an investment – it is still a risky investment. But by instituting investor protections, the market will be more stable. That, in turn, will lead to greater value over time. But the benefits of regulation are many. It may be difficult to define the benefits of regulation, but investors should remember that the main benefit of crypto regulation is to protect investors.
While the CFTC does not have a permanent head, Chris Brummer is a well-liked figure with a deep background in the cryptocurrency space. And the SEC’s latest move on crypto regulation is not completely unrelated to the SEC’s stance on money laundering and terrorist financing. The Financial Action Task Force, a coalition of 200 countries, recently issued a draft guidance for regulating digital assets.
While Washington was once a little confused when it came to cryptocurrency, the SEC has recently weighed in with an executive order. The SEC is currently chaired by Gary Gensler, who taught a crypto course at MIT. He recently suggested that digital currencies be exempt from the securities regulations for three years. That’s a good start, but there’s still much work to be done before that.
Regulators can help tame cryptocurrencies by spooking the bad actors. It can also help by shifting individual trader activity to a foreign exchange. This move has advantages like no capital controls and no currency conversion fees. But it’s not a solution to the shaky regulation of cryptocurrencies. But if regulators are willing to do it, the market will react positively. If regulators want to make money in crypto, they should give it to more serious countries with better regulations.
Regulators should give less weight to factors that penalize crypto assets. These include factors that prevent tokens from becoming securities. These should be minimized if possible, as tokens are similar to securities. Decentralized governance and network development should be the most heavily weighted factors. They could also be the first types of regulated crypto assets. Lastly, regulators should give greater weight to factors that support the integrity of the market.